tv Fast Money CNBC October 9, 2015 5:00pm-5:31pm EDT
they are going to be down. >> and as we said, they have plenty of excuses this time around. >> got to look forward a little more. like at china and oil. >> thank you, kevin. >> thank you. >> always fun. kelly is back on monday. we look forward to that as well. thanks for joining us on "closing bell." have a good weekend. "fast money" is next. thanks guys. "fast money" starts right now. live from the nasdaq market overlooking a rainy time square. dan, dave, steve and guy on the panel today. are other companies having the same type of pricing powers. the picks that could lead to big profits. and plus oil had the third best year since 2009 so why didn't the airlines take off. the answer could lead to a mile high trade. and everything went up this week except for apple. why was the company sitting on
the side lines. and first the market story of the moment. stockies alley 3%, the best week before the start of earnings so could investors walk into a trap. not the best setup into a week of earnings season. >> the answer is i believe they could be walking into a trap. last week when we troughed in the s&p after a horrific jobs number, since then the s&p has rallied probably 130, 140 handles on what? on what appears to be hope to me. because the earnings we have seen has been lousy. in a word, lousy. not to say that next week is not going to be great. but the data hasn't been good. but the only thing that is good is that somehow the fed is on the sideline and maybe the next move is not to raise rates or some other bizarre qe, qe 4. but the way we traded this week leads me to believe a lot of
people believe that. >> what guy has said is worrisome. i don't think we saw anything this week that would deter them from the thought pattern. but if you look at the technicals. 9-17 stopped out where, 2020. that is where we stopped at today. so if you believe in technicals, it does look double top-esque to the technician. >> how do you think we set up? >> people are pessimistic going into earnings and i think they will be benign from the standpoint of the market. i think people are buying the stocks that are beaten down, the energy names an the miners and stocks that underperform, people are flocking into. there is a big reposition on the street. i think it is important to take notice of that. >> that's important in the markts rally. we've seen an increase in the s&p by 300 but if you look at the names rally like steel and x, they are not bell weather for
the market whatsoever. >> and you are speaking to breath, melissa. and there are stocks with heavy lifting in the major indices and that is not big when you think about the 200 day average is trading down for the first time since 2011 and in the s&p 500 q3 is supposed to decline 5% year-over-year. if they do decline this quarter, it is the first time since 2009 they've had two consecutive declines. so we could be on the press pis of an earnings recession here in the u.s., which could lead to a recession. and talking about the jobs data, the s&p is up 8% from last friday and there is no good data. we've had bad data out of germany, export data. so if the u.s. is able to decouple from an emerging market, that is silly. >> and you have materials and industrial running, all of the names to seaberg's point, all of the name's unfavored thus far this year and now you start to
see health care today start to move up those ranks which has been a favored name. you see a slight reversal after of it and i think you'll see more of the normal action coming back in the next week or so. you're going to start to see material, energies, industrials fade again. >> running up into earnings is not a good thing and expectations have come down. i spoke to an analyst at barkleys who covers the banks and he said they've had 2016 eps estimates come down since the start of the year so have we already ratcheted back our expectations to maybe we are in the clear, even with the rally. >> we'll find out. and we'll see things out of china next week. things will change. the data has not been good and it won't change overnight. the oil story didn't change this week. but what did change is the capacity to take on the risk and the all-clear, thinking we're mirroring october of 2014. that might be the case. but i submit the chasm continues to widen and that won't matter
at some point. >> and united airlines reporting a boost sending shares sky high. calvin and company research analyst and managing director, hellain, thank you for phoning in. >> thank you for having me. >> where are investor heads right now. oil had one of the best weeks in a long time. are we at the point now where we are concerned about fuel prices climbing? >> not really. i think, you know, it has been a really tough year for the airlines. fuel prices have been down and not only have been the stock prices down but ticket prices are down. and that is typical. ticket prices follow fuel prices with about a one quarter lag. but investors have been really concerned about capacity growth. they've been concerned about these declining prices and it would be good if we had stable fuel prices instead of volatile fuel prices because then we could at least get stability on
the airfare side and we'd see better numbers than the numbers we're going to see in a couple of weeks when the guys start reporting. >> in terms of ual and american, are these great reports but one-offs or is this the way it is going to be for much of the industry? >> no, i think it is going to be a good quarter for the industry and in general. everybody ignored delta's release a week or so ago when they guided higher and then this week we've caught a series of really good numbers. everybody guiding higher. dealt reports on wednesday, we think it will be a record quarter. you know, 2015 is going to be a record year for the airlines and investors are just not willing to pay for lower fuel prices. it is not what they want to see. they want to see higher revenues as opposed to margin improvement through cost improvement. yet everybody guided to the higher end of margin improvement
and they are throwing off free cash flow which is being used to buy back stock and that is helping the bottom line as well. so i think at some point the investors will start to catch up and realize they are not overexpanding. load factors are still in the 80-90% range. september was a good month. october is not a bad month. and of course everybody goes home for the holidays. >> and we have 15 seconds. what is your top pick in the space? >> our top pick is one we didn't talk about, southwest. >> southwest, okay. we have to leave it there. thanks for phoning in. appreciate it. hellain becker of cowan and company. where do we go on the airline trade here. >> i go for with the outwinner and that didn't work this week and if you look at the airlines over all, a lot of stuff has and hasn't works and what continues to work is jet blue and it is up 65% year-to-date. and southwest is down 6% year-to-date. if new money comes back, they go
back for the favorite name and it is jet blue. it is way above all of the moving averages. >> wayne was talking about massive buybacks. american bought back $2.5 billion of stock through the end of september. >> and it is one of the bad stocks. united has the most exposure overseas. but her final pick, southwest makes sense. domestic related here. and the stock has been consolidated around $40 and make you break above the 200 day moving average. i would not chase united after the rally today. >> steve, your pick in this space? >> i have to stick with hellain, ual. and you will see a big rally and specifically in the fourth quarter and i think it could move higher in the group. >> when you know when the airlines topped out magically it was about january of this year. and it was odd that we did a tag team, when dan nathan and i were the negative one and we got
ridiculed. >> i remember that clearly. >> jet blue. steve was right. jet blue. 20% short on the 22nd. that hos outperformed. >> up next, netflix raising rates for the standard streaming plan and that got us thinking what other companies have the ability to raise prices and pass along profits to shareholders. the names might surprise you. and next week from bank of america to intel, which stocks could see the biggest expected moves on earnings. we're breaking it down. and which one of these men are the real apple ceo. >> it might be a simple question for you but you would be surprised how many people couldn't answer that. we'll show you the tape when we come right back. when you're not confident your company's data is secure, the possibility of a breach can quickly become the only thing you think about. that's where at&t can help.
at at&t we monitor our network traffic so we can see things others can't. mitigating risks across your business. leaving you free to focus on what matters most. a 401(k) is the most sound way to go. let's talk asset allocation. sure. you seem knowledgeable, professional. would you trust me as your financial advisor? i would. i would indeed. well, let's be clear here. i'm actually a dj. [ dance music plays ] [laughs] no way! i have no financial experience at all. that really is you? if they're not a cfp pro, you just don't know. find a certified financial planner professional who's thoroughly vetted at letsmakeaplan.org. cfp -- work with the highest standard. dentist appointment when my teeth are ready? ♪ can it tell the doctor how long you have to wear this thing? ♪ can it tell the flight attendant to please not wake me this time?
netflix, despite this decline today, still higher after raising the monthly price of the standard plan by $1 to $19.99. so let's kick off the top trades with other companies that hold serious pricing power among peers and by pricing power we mean the ability to raise prices. consumers saying it okay and the company raises prizes.
and so dan, what do you have to say? >> apple, the company makes so many margin on storage in the iphones and so they price the entry level phones at 16 gigs and you have to go up $100 to the next level. right now that is 64 gigs. that is pure profit for them. so to me they have this amazing pricing power. ultimately i think they will succomb to that. but apple right now, they've got it. >> seaberg. >> i think nike does have pricing power. the survey on the stock has indicated people are willing to pay more for the product and they take an existing product and they recreate it and add some existing feature and launch it as a new shoe. nike is $125 and next stop $140 and it probably goes higher. this name continues to win and they are doing well. >> that makes me never want to buy nike shoes. >> i know. >> grasso?
>> you need a brand. dan started out with apple. i'm going with the second ultimate brand that i think is disney. disney, whenever you think about anything, they have that brand. they have it for the sparks for the movies. pixar, everything around disney is a brand. so if you look at this, they raise the prices at the parks every year. june, when the kids get out of school, you have one choice where to go. you are not taking them to nathans, maybe you will. but you'll take them to disney. sometimes they raise them twice a year. they do have pricing power. >> wow! >> this is interesting. so this is a company, that you are not familiar with their brands, mel. don't make the face at me. i know it is raining. don't make the face. lockheed martin. you know why? because they have tremendous pricing power. on october 20th, we're going to find out how much. if you think they are expensing at 16 times earning.
they have great eps. great backlog. decent dividend. it closed lower and it has been on fire, adam teal gets you done. >> pricing power. >> they sell things. >> yes. apparently, yes, they do. our next top trade is a special edition. so many top trades together. one we're calling a ceo omg courtesy of elon mesk. he is taking shots at the electric car emissions with a german paper. when asked them about poaching engineers. he said, quote, important engineers? they have hired people we've fired. we call apple the tesla graveyard. if you don't make it at tesla, you go work at apple. i'm not kidding. those are his words. grasso. >> when you look when steve jobs was working at apple. they didn't do it. there was article written about it, they didn't poach each
other's talent. >> they cluded not to take each other's talent. that is what the justice department is stating. >> it is a fact. they didn't do it. and now that used to stifle growth, if dan were let me finish. if this was a long show, we would be finished. he is sort of angry and there is a tone but he should worry more about the production numbers. because tesla has a huge problem coming forward. he's looking to make 500,000 cars by 2020. morgan stanley is forecast lower. and it sounds like he is getting angry. for me that won't bode well for the stock. i think something is going on behind the scenes that they bit off more than they could chew and something a ceo should never talk about publicly. >> this week we had a downgrade and a price target cut and initiation at a rating which is
essential neutral. >> here we are 220. the level that we've talked about a number of times in terms of being important and we close there which makes your weekend interesting if you are long the stock. i do think it holds. but if i'm wrong, this i often am. it has 180 written all over it and then you evaluate it. >> and i think the finish end of the is sem blabl line it effects the s and the x. and that could impact the 2015 deliveries. >> that is important. they can't stumble on execution. people are paying a premium for. and right now i think tesla is a buy. i think it is a great company. i think they will fulfill on the execution requirements an the stock will go higher. the thing about tesla and here is the key about it and i was having a conversation with a guy about it today, it is about
getting the brand disbursed to the general public. >> but they have to hit s and s or else they won't hit 3. >> they've sold 18 million cars in september and they're going to do 50,000 on the year, to me i'm with guy, execution issues. they should get done with the model x and get to the model 3 and get to the mass market because that is the only way they'll be a car company. >> coming up next, which stack is due for a gain next week. you're watching cnbc. here is what else is coming up on "fast." stocks are surging this week. but one name has been left in the dust. here is a hint. we'll tell you what it is that has apple in need of a reboot. plus, earnings season kicking into high gear next week. and there is one thing traders see having a huge move and chances are you've used the stock's product. all of that and more ahead this
hour. awe believe active management can protect capital long term. active management can tap global insights. active management can take calculated risks. active management can seek to outperform. because active investment management isn't reactive. it's active. that's the power of active management.
instruments, i play the orchestra. >> that was a clip of the new steve jobs' movie by universal had a hits theaters today. while apple and steve jobs are synonymo synonymous. steve cook has been the ceo but does he have the notoriety that steve jobs does. and we sent guy out to show people these pictures. to see if people could correctly identify the ceo of apple. check it out. >> it is guy. i'm out here at time square of course. going to play a game. kareem, who is the ceo of apple. steve cook, steve jobs or michael mast bender. pick one. and his name is? >> gates. >> tim cook.
>> my man, job. okay. you got it. >> look at the guy in the middle, what do you think of him? >> beautiful guy. >> guy in the middle, he's good looking guy, right. >> i don't know about this. >> and this guy right here. >> and his name is. >> tim cook. >> and pick one. >> he's a good looking guys. >> southern or northern italian. >> northern of course. >> and his name would be? >> giovanni. >> [ laughter ] >> so honestly, you interviewed like what, a dozen people on the street and how many correctly identified? >> about a third. >> -- tim cook. people thought it was tim seymour. and a lot of people we couldn't play the interviews some of the commentary was so bad. man, we have to cut that stuff
out. that guy is -- >> i'm just saying. >> check out how apple has performed under tim cook's reign. the market happen has grown by $287 billion. but cook has only launched one new product category since taking over. that is the watch. is apple lacking innovation and where does the stock go from here because it has had some real difficulties, dan, lately? >> i think that tim cook was chosen because he's an operator. he was the logistic guys and the supply chain guy and he's done an amazing amazing job of that. and over the last four years they haven't introduced anyth g anythingino vaseive and one thing you didn't run was musk saying have you seen the apple watch. i just got a new iphone. i think it is incremental. they need to come out with some wow stuff as the stock trans --
transitions into a middle to level range. >> i agree. when you find out your next growth cycle, the nest part of the growth cycle, as your current -- >> i have to interrupt. breaking news on twitter. seema in the newsroom. >> here is the news. twitter is planning a company wide layoffs for next week, according to requota citing sources. it is unclear how much of the twitter staff will be pulled but insiders say it will likely effect most if not all departments. this is citing sources of twitter layoffs, we'll get more as it continues. another story i want to get you updated on is ferrari. the ipo of more than 17 million common shares offering twice between 48-52 dollars listed on
the new york stock exchange under the sim poll race. and that is the update. back to you. >> this follows the twitter news from recode, and they are reporting that they are announcing layoffs, this coming after jack dorsey was named permanent ceo. it is almost to be expected. is this good news that it is showing that it is willing to be disciplined? >> i'm not really sure when you -- in and everyone and investor's mind you are looking for it to be a growth stock. it is not synonymous when you see layoffs. you see layoffs from a company that is mature like a hewlett-packard. i don't think it is healthy. >> gee? >> i think there will be a moment when they kitchen sink things but the price action has been good over the last few weeks. you are long against $25. >> what do you say. >> no, i stay away. >> does it make it worse, the layoffs? >> i think it is a headline. and i think steve is 100% right.
and you can look at it and construe a negative headline but the headline is we're reinstructing the company and making people more confident and the fact is they are laying people off for a reason. >> here is a company that hopes to get leverage out of the products they are working on and if you can do that and cut cost, you will see earnings growth. >> twitter will be announcing layoffs next week. after the break, find out the stock's biggest expected earnings. that is up next on optio"option actio action". stay tuned. invest with those who see the world as unstoppable. who have the curiosity to look beyond the expected and the conviction to be in it for the long term. oppenheimerfunds believes that's the right way to invest... ...in this big, bold, beautiful world.
was going to clean if an better than a manual? he said sure. but don't get just any one. get one inspired by dentists. with a round brush head. go pro with oral-b. oral-b's rounded brush head cups your teeth to break up plaque and rotates to sweep it away. and oral-b delivers a clinically proven superior clean versus sonicare diamondclean. my mouth feels super clean. oral-b know you're getting a superior clean. i'm never going back to a manual brush.
hey there. we are live at the nasdaq markets. where i only have one question. who is this guy? guy and the rest of the gang are getting ready. check out what is coming up. >> perhaps delicious for your portfolio. we'll tell you what it is about. soup and cereal stocks that some some flat out salivating. plus have you lost money in twitter. >> it is not even a question i'm considering. >> well jack, other investors feel differently. fortunately we have a way to get your money back and it won't cost you a dime. we'll explain. and --